Flexible workspaces have become increasingly popular in Ho Chi Minh City, largely due to the limited supply of traditional office space in desirable locations, according to a JLL report released on December 13.

At 8.1 per cent, Ho Chi Minh City has one of the highest CBD penetration rates of flexible workspaces in the Asia-Pacific, primarily due to its relatively limited Grade A office stock.

The supply of flexible workspace in the city grew at an annualized 31 per cent from 2014 to 2017, slightly slower than the regional average of 35.7 per cent.

While international operators like Regus and WeWork, the latter of which acquired Naked Hub last April, look to secure Grade A and high-quality Grade B office buildings in the city, local operators are turning to Grade B and retail space formats to cater to growing demand.

The average flexible workspace size has fluctuated recently. While some larger spaces have been opened by Toong and UP, a number of smaller openings have pulled down the citywide average.

The report also noted that manufacturing is driving demand for space as companies move their factories to Vietnam, boosting demand for office space, including flexible options.

Local manufacturers may use flexible workspace options as a way of reducing operating expenses, by taking up flexible space instead of traditional office space and putting more emphasis on capital injection into the core business.

Established multinational corporation (MNC) manufacturers may require a representative office in their initial phase of entering into a new market, with flexible space being a viable option in the short term when the headcount is uncertain.

JLL forecasts that, with the expansion of local flexible workspace operators and the entry of international players into the Ho Chi Minh City market, supply will rise exponentially within the next few years.

While MNCs have already begun to adopt flexible space into their portfolios, it may take some time for conservative domestic corporates to adopt agile and flexible ways of working.

Both international and local operators are keen to promote built-to-suit workspaces wherein they develop and operate a dedicated flexible space based on client requirements. In the near future, the market is expected to welcome more workspaces.